Today’s the day for advice

On the first working Monday of the New Year, more people search for a financial adviser than on any other day. Will you be among them? Whether you’re saving, buying a home or drawing a pension, here’s how independent advice can give you the best possible start to 2017.

Advice Day isn’t one of those tiresome made-up days (e.g. Talk Like a Pirate Day) but a very real annual phenomenon. It’s the day of the year on which more people search for a financial adviser than on any other. But why?

Advice Day marks the peak of a much larger advice rush that happens early in the New Year. The first working Monday is when people begin to think seriously about the year ahead, and their financial plans in particular. And due to a turbulent 2016 full of changes, there’s reason to believe that this year’s Advice Day will be the busiest ever. So what are the main issues to consider?

Brexit fallout

The economic consequences of the Brexit process have proved hard to predict so far, and we’re due for another wave in March when the government plans to invoke Article 50 and give the UK’s two-year notice to leave the EU. Another plunge in the pound should not be ruled out, but given that the element of surprise is missing, it should not have a major impact. However, the short answer is that no-one really knows. An IFA can give you advice that takes such uncertainty into account.

Pensions

In the last Autumn Statement, Chancellor Philip Hammond closed a loophole that allowed the over-55s to claim double tax relief on their pensions. People who have started to draw their pensions can currently still pay up to £10,000 a year into them and receive tax relief at their highest income rate. However, from April this year this allowance will fall to £4,000.

We can expect plenty more tweaks to pensions over the coming year – and some commentators are still predicting a cut in higher and top-rate tax relief to help the Chancellor slash the deficit. If you’re a higher or top-rate taxpayer, such a move would hit your pension plans hard.

Savings and investments

From April the much-heralded Lifetime ISA will become available. Seen by many as a hybrid between an ISA and a pension, it offers tax-free interest, investment returns and withdrawals, plus a government bonus of 25 per cent (up to £1,000 a year) until age 50. Some believe it to be a replacement-in-waiting for pensions, but it has many differences. Designed for the dual purposes of first-home buying and retirement, it’s a complex beast – so if you’re thinking about getting one, seek advice first.

Other savings news arrives in the form of the new three-year bond from NS&I, likewise available from April. The ‘Investment Guaranteed Growth Bond’ will offer a predicted 2.2 per cent over three years, beating all other bonds currently on the market. However, the maximum investment is just £3,000 so talk to your adviser about whether this is right for you.

House prices

Growth in house prices slowed in 2016, possibly as a consequence of the Brexit vote, and most predictions are for this slowdown to continue in 2017. Forecasts from Halifax and Nationwide suggest a house price growth of between 1 and 4 per cent, as compared to 10 per cent in March 2016. However, this still means homes are getting more expensive – so first-time buyers will need all the help and advice they can get.

Landlords and buy-to-let tax relief

This year landlords will start to lose higher-rate tax relief on mortgage repayments as the cut is phased in, with just 25 per cent of the relief initially withdrawn from April. The rental market may slow, but a lack of good alternative investments may prompt most landlords to hang on to their properties for the time being. Tenants may be the ones who feel the pinch in rising rents.

Now is the time to assess your financial situation and decide whether buy-to-let can still be profitable for you. Various fixes may be possible (such as incorporating) but it may take an adviser to help you decide which is best for you.

These are just some of the broader reasons why more people are rushing to find a financial adviser this week. But everyone’s individual circumstances will be different – which is what makes personal financial advice so important.

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Opinions expressed within blog articles are those of the individual author(s) and do not necessarily reflect the views of either Nexus IFA or The Whitechurch Network. Blog articles are for general information and guidance only, they are not intended as personal financial advice or a recommendation, and should not be relied upon in making (or not making) financial decisions.

Information within articles is based on current understanding and can be subject to change without notice, the accuracy and completeness of the information cannot be guaranteed. We cannot assume legal liability for any errors or omissions articles might contain.

Appropriate professional financial advice should always be sought before making any decisions regarding your finances.

It is important to remember that all investments carry some risk. The value of an investment (and any income received from it) can fall as well as rise and you may not get back what you invested. Past performance is no guarantee of future performance. If you withdraw from an investment in the early years, you may not get back the full amount you invested.

A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

A mortgage is a loan secured against your home or property. Your home may be repossesed if you do not keep up repayments on your mortgage or any other debt secured on it.

Some forms of Buy to Let advice are not regulated by the Financial Conduct Authority (FCA).

Tax Planning, Trust Advice, or Estate Planning are not regulated by the Financial Conduct Authority (FCA).

Nexus IFA Ltd is an appointed representative of The Whitechurch Network Limited which is authorised and regulated by the Financial Conduct Authority (FCA).